Abu Dhabi, UAESaturday 21 September 2019

Deutsche Bank CEO to be quizzed over recovery plan

Christian Sewing to face investors over his revenue growth targets on global roadshow to win backing for his $8.4 billion overhaul

Christian Sewing will face questions on tour to gain backing for his huge revamp of Deutsche Bank. AP
Christian Sewing will face questions on tour to gain backing for his huge revamp of Deutsche Bank. AP

Deutsche Bank investors will press chief executive Christian Sewing on how he will deliver on revenue growth targets during a global roadshow to win backing for his $8.4 billion (Dh30.84bn) "reinvention" plan.

Shares in Germany's biggest bank rose by 2.1 per cent in Frankfurt trading on Wednesday, recouping some of a near 10 per cent drop, the biggest two-day fall in almost three years, since it detailed a sweeping overhaul involving 18,000 job cuts on Sunday.

The revamp also includes the creation of a "bad bank" to house billions of euros of costly trading positions and relieve pressure on Deutsche Bank's stretched balance sheet, according to Reuters.

Some investors said they doubted these moves, along with scrapping Deutsche Bank's global equities division, would be enough to turn around its flagging fortunes in the face of intense competition and low interest rates.

Deutsche Bank said it was targeting an 8 per cent return on tangible equity (rote) by 2022 but flagged "significant uncertainty" that it would break even in 2020.

Others said they were worried Deutsche Bank would backtrack on a pledge not to tap shareholders for additional cash, particularly in view of its capital constraints.

"The revenue growth targets are difficult to believe," one fund manager said, speaking on condition of anonymity.

"DB hasn't managed to grow revenues for several years now - why that will change after the impact of a big restructuring remains unclear."

Deutsche Bank's management is also expected to meet staff rattled by the proposed changes and the sudden departure of colleagues who vacated desks across three continents on Monday.

The bank is quitting its entire presence in some Asian markets but has so far kept the finer details of layoffs in the United States, Germany and other parts of Europe under wraps.

Despite the upheaval, Deutsche Bank's corporate broking clients are sticking around so far, even as the lender prepares to shut its global equities business, Bloomberg reported.

McCarthy & Stone, Travis Perkins and Carpetright all say they’re staying put. They’re among 27 major London-listed companies that have Deutsche Bank as their corporate broker.

In a British peculiarity, publicly traded companies are required to retain corporate brokers to act as intermediaries to the equity markets, providing insight on who is buying and selling their shares. Brokers will often lead any sales of new stock should a company wish to raise funds, making the relationships particularly lucrative.

The lender was criticised by members of the public and financial sector commentators on social media when upmarket tailors were seen leaving its London offices after a suit fitting with senior managers, on the same day hundreds of staff were fired. Deutsche Bank declined to comment on Wednesday.

On Monday, Mr Sewing told analysts that while his restructuring plan may sound familiar to those who have followed Deutsche Bank's previous attempts to overhaul its sprawling business, this restructuring was not the same.

"It is different this time. We are different."

He plans to invest a quarter of his €820,000 (Dh2.2 million) fixed salary in the bank's shares, which hit a record low last month, a source said.

Updated: July 10, 2019 05:06 PM

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